Dollar faces historic slump as stocks hit new high

Photo illustration of the U.S. dollar falling

The last time the dollar 'weakened so much at the start of the year was 1973'

(Image credit: sefa ozel / Getty Images)

What happened

Major U.S. stock indexes Monday ended the first half of 2025 at new highs, erasing steep losses incurred after President Donald Trump announced unexpectedly aggressive tariffs in April. But the U.S. dollar has fared worse, suffering its "worst start to a year in more than half a century," The New York Times said.

Who said what

The S&P 500 and Nasdaq closed at record highs Monday and the Dow Jones Industrial Average edged up 0.6%, buoyed by a surge in AI investment and energy stocks, restrained inflation, a resilient job market and Trump's retreat from his most extreme tariffs. But while stocks have "recovered," the Times said, "the dollar has continued to slide," weakening more than 10% this year versus a basket of other major currencies.

The last time the dollar "weakened so much at the start of the year was 1973," after the U.S. made the "seismic shift" of delinking the dollar from gold, the Times said. "This time the seismic event" is Trump's trade war and "isolationist foreign policy." The combination of tariffs and Trump's pending jump in deficit spending have also made U.S. Treasuries, "traditionally a refuge for markets," volatile and "less attractive for overseas investors," Reuters said.

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What next?

A weak dollar helps U.S. exporters, the Times said, but makes it "more expensive for Americans to travel abroad and less attractive for foreigners to invest in the United States," just as the government is "trying to borrow more money." Market analysts "see significant uncertainty for the second half of the year," The Washington Post said, unconvinced that the bull markets of 2023 and 2024 will continue for a third year.

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.